Industry 4.0 is upon us. The Fourth Industrial Revolution, as it is often called, is the digital transformation of manufacturing processes to improve value creation in the face of increasing consumer demands. The tilt towards digital transformation began in the 70s when the seeds of IoT were sown. At the time, edge devices were controlled by sensor data. Fast forward 50 years and digitalization has found its way into business processes with innovations such as cloud systems, AI, and smart automation leading the charge.
Successful digital transformation of manufacturing can be attributed to:
- Borderless penetration of technology. We live in a world where innovative creation is for all comers. Amazon’s AWS allows businesses to access its cloud suite. Microsoft’s Power Platform supports coding from civilians. Also, developers with basic machine learning expertise in machine learning can use Google’s Cloud AutoML to train reliable models for their business concerns.
- Cheaper data storage. Data collection and processing is a near-effortless exercise. The ease of data handling creates an avalanche of data required to enhance the preciseness of ML protocols. Even better is how easily businesses can purchase data to train algorithms more efficiently.
Scenarios & Examples for Digital Transformation
The applications of Industry 4.0 cut across all business descriptions. It’s not exclusive to large-scale industries as we are inclined to believe. Companies looking to embrace connected production can do so in four major ways, namely:
Offering a new product
IoT, AI, and associated cyber innovations serve as foundations on which improved products are built. Consumers demand to be served quicker and it is in the best interest of businesses to incorporate high-quality components, made-to-order features, and customer interaction functionality into products and services. Such sustainable approaches guarantee year-on-year revenue in an unstable business environment.
Example: Shoe machine fabricator, Desma, is concerned that Shoe 3D Printer will guzzle market size in their niche in the future. Widespread 3D printing of shoes may sink the demand for traditional machines. Desma collaborates with HP for a new product for their inventory to sustain their income.
Fitstation is a cloud-based service that collects foot features and assesses them to create the ideal shoe design. With a digital representation of their feet, consumers can print well-fitting shoes on a 3D printer from an online store halfway across the world and have it shipped to them.
Offering a new service
Data obtained from cyber-physical innovations avail opportunities for value chain upgrades that meet customer demands and optimize lifetime value. Companies involved in equipment production can monitor their equipment statuses in real-time using sensors. Whenever there is a malfunction, problem diagnosis can be performed instantly – and the problem fixed remotely. They can also deploy AI to predict faults and replace components to avert further issues.
Example: HELLER is a manufacturer of machines used in metal-cutting processes. A few years ago, they devised MindSphere – a solution that obtains data about how to operate their machines in real-time. With a mobile app, an operator visualizes vital machine data to monitor machine operations and statuses more efficiently. MindSphere helps the company perform quality maintenance work for their customers under a service contract. The company acts swiftly to prevent customers from experiencing process downtimes.
Improving business processes
Smart automation of routine tasks allows companies to maximize their internal operations. Reduced costs, cutting-edge product quality, an elevated experience for customers, and high profitability are some of the perks of personalized production.
Example: German printing service, INnUP, offers printing in peculiar formats on special paper. The company searches for printers to fulfill their orders. It takes their 5 employees up to 24 hours to complete the process. To reduce response time, the brand deploys AI. Presently, this proprietary program is in its training phase. In the future, the company hopes the algorithm can compute the price and generate a quote in a few minutes.
Creating a new business model
Renting instead of ownership is a new trend that has prompted the development of an as-a-service product business model. Allowing the customer to pay only when they use a product saves them from making the huge investment required to acquire the product. More so, they’ll avoid maintenance, replacement, and repair costs. The resulting customer surge will provide a stream of customer interaction data around product usage for service-optimization purposes.
Example: Elitebeds is a longstanding mattress manufacturer in Switzerland. Hotels are their main customers. During a period of declining demand, the company fashioned a new business strategy that involved persuading the hotels to pay for each mattress use instead of buying them outrightly. To track usage, Elitebeds fitted the beds with pressure sensors to record the occupancy of each one, and the duration of occupancy is visualized on a dashboard.
Guidelines for a Successful Digital Transformation Strategy
The implementation of a digital transformation architecture for your business requires a well-thought-out strategy that contains a vision of the status of the business and the rationale for digital migration.
A sound digital transformation outline will help you to reimagine your business and give you a stranglehold on the market. The following steps will help you adopt digital capabilities successfully.
- Understand your customers’ needs. While AI and IoT are ubiquitous, remember that technology is just a means to an end: the actualization of your business goals. First of all, identify the business problem. Next, determine how technology can enhance it. Listen to your customers and learn their pain points. Only then can you find the right technological approach to satisfy their needs.
- Start with a proof-of-concept.
Once you have identified that which frustrates the customer and the suitable tech stack, go with a proof of concept. Test run, assess, review, and repeat. Scale-up when you confirm its viability as it will help you respond to variable conditions rapidly.
- Empower your employees. In addition to digitalizing processes, digital transformation aims to break down communication barriers in organizations. Some employees, especially older workers, are resistant to change and are reluctant to try new things. This is an opportunity to redelegate certain responsibilities and get feedback. This will create a close-knit workplace of motivated employees.
- Plan your budget properly. When the vision, technology, and staff members are in place, you can start making preliminary cost estimates. Keep in mind that digital transformation is an iterative process that must be reevaluated at certain stages for credibility. Expect digital overhaul to permeate all aspects of your business including communication, employee responsibilities, and other internal procedures.
- Identify the right benchmarks for success. While it’s important to seize a sizable chunk of the market and stay within your budget, it is much more critical to focus on improving your ROI for future projects sequel to digital transformation. Many projects fail because of insufficient capital and the failure to redirect profits towards process improvements.
Digital transformation goes beyond just adding fancy technology in a bid to look futuristic. It should be seen as an essential reimagining of all aspects of the company. Thankfully, you don’t need to drive yourself into the ground trying to set it in motion. Our digital transformation experts are on hand to ideate your solution, incorporate emerging technologies, create a detailed blueprint, and deliver your first PoC or MVP solutions.